KT Profit Climbs 12%
As Costs, Revenue Decline

South Korea's largest fixed-line operator by revenue said net rose to 409.2 billion won ($438 million) from 364.8 billion won a year earlier.

Revenue slipped 2.7% to 2.9 trillion won from 2.98 trillion won, while operating profit climbed 9.1% to 664.7 billion won. The company attributed the revenue drop to less traffic and a decline in new subscribers amid fierce competition in the domestic broadband market.

KT shed 1,987 broadband subscribers during the first quarter, bringing its subscriber base to 6.24 million at the end of March. Fixed-line subscribers totaled 20.84 million, down 6,000 from the end of last year.

KT had about a 93% share of the domestic fixed-line market and a 50% share of South Korea's household broadband market at the end of March.

The company's operating expenses fell 5.7% from a year earlier to 2.23 trillion won thanks to the company's cost-cutting efforts,
KT spokesman Cho Chul Je
said.

"Lower labor and marketing costs boosted operating profit, but declining subscribers weighed on revenue in the first quarter," said an analyst at Daehan Investment & Securities.

KT said labor costs fell 7% from a year earlier even as wages rose 3.4% in the same period.

In the current quarter, the company will likely face tougher competition in the market for high-speed Internet service, analysts said.

They said that in the near term, KT will face a strong challenge from emerging high-speed Internet service providers such as
Hanarotelecom Inc.
and Powercomm, a unit of Dacom Corp.

"Amid stiff competition among local players, KT has to come up with a new source of revenue to remain at the top,"
said Lee Shi Hoon,
an analyst at Hyundai Securities.